Dutch financial services group ING on Wednesday reported a 5.6% fall in first quarter net profit, hurt by weaker banking results and after a winter storm in Europe hurt insurance profits.
Net income fell to 1.894 billion euros ($2.57 billion) for the first three months of the year from 2 billion euros a year earlier, and compared with an average forecast of 1.89 billion euros in a Reuters poll of 11 analysts.
"Strong commercial growth helped compensate for a challenging interest rate environment in the first quarter," ING Chief Executive Michel Tilmant said in a statement.
ING also said it would buy back 5 billion euros worth of shares beginning next month for a year.
ING said that strong life insurance results in Europe and the Netherlands offset claims from a severe weather storm that hit Belgium and the Netherlands in January.
Insurance profit, excluding taxes and other charges, fell 10.7% to 1.076 billion euros.
On the same basis, banking profit fell 3.8% to 1.38%, hurt by flatter yield curves that make it more difficult for the bank to extract profits from long-term loans.
ING said in a separate statement that it would overhaul its Dutch retail banking operations, which currently operate under the Postbank brand.
That brand will be replaced by the ING brand after 2009 and ING said it will invest 890 million euros over five years to improve the profitability of the banking operation, and also cut 2,500 jobs.
ING also announced that its direct and Internet banking business ING Direct has applied for a banking license in Japan, and expects to launch in the second half of 2007.